Final Results

Norcon plc

("Norcon" or the "Company")

FINAL RESULTS

For the twelve months ended 31 December 2012

Norcon plc (LSE/AIM: NCON), the global communications network specialist, is pleased to announce audited results for the financial year ended 31 December 2012. Despite a decline in annual revenues, driven mainly by a slower uptake and ramp-up of 4G projects in the Middle East during H2, the long-term investment strategy continued with the engagement of key hires, diversification into new markets and the expansion of the services portfolio. The combination of these investments is re-positioning the business to secure a wider customer base in a more diverse geography set.

FINANCIAL HIGHLIGHTS

·; Revenue of US$49.6m (FY 2011: US$66.6m)

·; Operating profits of US$0.3m (FY 2011: US$6.2m)

·; (Loss)/Profit before tax of US$(0.6m) (FY 2011: US$5.4m)

·; (Loss)/Profit after tax of US$(1.7m) (FY 2011: US$3.5m)

·; Cash at year-end US$11.0m, of which unrestricted balance is US$4.2m

·; Pro forma (loss)/earnings per share on a basic basis of US$(0.03) (FY 2011: US$0.07) with 48,800,808 shares in issue at year end.

OPERATIONAL HIGHLIGHTS

·; New CEO and senior management sourced and appointed across the Norconsult Telematics business.

·; Two new business operations started in North America and Europe with new orders obtained across both.

·; Services product portfolio enhanced and extended into Engineering based solutions.

·; New client engagements secured in Asia utilising the combination of legacy and newly developed services.

OUTLOOK

In 2013 we will continue to invest in diversification by geography and product. As we continue to invest in the business we expect the result for 2013 to be in line with 2012, The full financial impact of these investments and cost efficiency measures will not be significant until 2014 and beyond.

Commenting on the results Norcon Chairman, Trond Tostrup, said:

This has undoubtedly been a challenging year for Norcon. It has been the first year of our transition plan with a negative result which is mainly due to a slower uptake of our products and the additional investments made in personnel and new markets in 2012.To be best positioned for the competitive challenges ahead, we have substantially reduced the overhead in the holding company, Norcon Plc, whilst developing a more sophisticated product mix in the operating company, Norconsult Telematics.

For further information, please contact:

About Norcon:

Established in 1957, Norcon (LSE/AIM: NCON) has been a trusted consultant and project manager for more than half a century to the private sector and government agencies. These organisations rely on Norcon to select, implement and maintain a communication infrastructure that not only matches, but also supports the critical needs of their operations. Norcon's strength lies in its understanding of complex communication networks and their design.

www.norconplc.com

CHAIRMAN'S STATEMENT

This has undoubtedly been a challenging year for Norcon. It has been the first year of our transition plan with a negative result which is mainly due to a slower uptake of our products and the additional investments made in personnel and new markets in 2012.

To be best positioned for the competitive challenges ahead, we have substantially reduced the overhead in the holding company, Norcon Plc, whilst developing a more sophisticated product mix in the operating company, Norconsult Telematics.

Our historical exposure in Saudi Arabia is further reduced, the result being an increased focus on acquiring new clients and projects in other geographical regions which is already showing results.

Communication plays an important role in all societies across the globe, and the need for new technologies to expand existing capacity, and to widen product and service offerings are key for the growth in our market.

Our focus as a company, and as a Board, is to return to profitability and our efforts to expand our business will remain our key priority going forward. Based on our position in an expanding market we are convinced of success albeit 2013 will be another challenging year whilst the cost savings we have made continue to come into effect.

We benefit from a dedicated and highly capable team in the Norcon Group. This team is our greatest asset and I thank each and every Norcon colleague for their commitment, enthusiasm and efforts in this challenging year.

Trond TostrupExecutive chairman

Financial Review

We are pleased to release our audited numbers for the twelve months ended 31 December 2012.

Summary

2012 has been a difficult year for Norcon with reduced revenue and profit. Despite this Norcon has invested in new products and geographies whilst still retaining a strong net asset position of US$ 23m at the year end.

Revenue for 2012 totalled US$49.6m (FY 2011: US$66.6m). The decrease was primarily due to slower uptake and ramp-up of 4G projects in the Middle East. Gross profit for 2012 was US$5.8m (FY 2011: US$10.7m).

Gross margin for 2012 was 12% for the year (FY 2011: 16%), due to increased cost of sales proportionally related to increased competition as well as legacy costs in connection with restructuring the composition of some projects.

Loss before tax was US$(0.6m) for 2012, compared to profit for 2011 of US$5.4m, due to lower gross margin and investment into diversification. Administration expenses were approximately US$0.9m higher in 2012 than in 2011. Due to restructuring, our administrative expenses were reduced towards the end of 2012 which will be beneficial for the years to come.

Loss after tax was US$(1.7m) for 2012 compared to profit for 2011 of US$3.5m. The underlying tax rates in the respective jurisdictions are detailed in the notes. With the restructuring mentioned above we expect a lower underlying tax rate with reduced overall liability for 2013.

Pro forma basic loss per share was US$(0.03) for the full year compared to the US$0.07 earnings per share for 2011. The weighted average number of shares for 2012 was 48,800,808 being the same as for 2011.

Costs

Cost of sales totalled US$43.9m for the period compared to US$55.9m in 2011.

Other operating costs, including net, operating and administration expenses totalled US$5.4m for the period up from US$4.5m in 2011. These increased costs are partly due to our investment in the market together with legacy costs related to restructuring of the Company.

Other net costs increased to US$1.0m from US$0.8m, largely related to increased financial expenses.

Taxation

Taxes were accrued in the amount of US$1.0m during 2012 (FY 2011: US$1.9m). The underlying tax rates in the countries in which we operate are detailed in the Notes. Though the Consolidated Statements are giving a negative margin, some highly profitable projects create taxable profits.

Foreign Exchange

The Company is continuing its policy of denominating revenue and expenses either in the local currencies if pegged to the US dollar, or in US dollars to the extent feasible. Foreign exchange translation gains and losses in the period are noted in the accounts, and remained at similar levels for both years.

Cash Flow

Cash flow was positive for the year as a whole. Our cash position for 2012 is lower compared to 2011 due to repayment of borrowings and dividends paid out to shareholders related to the year ended 31 December 2011. 2012 resulted in an increase in net cash flows from operating activities of US$ 2.6m (FY 2011: 2.5m)

Balance Sheet

The Balance Sheet of the Company remains quite strong.

As at 31 December 2012, cash was US$11.0m (FY 2011: US$12.5m) with positive net cash of US$8.2m (FY 2011: US$7.1m).

The Company remains net asset positive, with net assets decreasing to US$22.8m in 2012 (FY 2011: US$25.4m).

Total trade and other receivables decreased to US$30.1m from US$35.2m in the prior year. Trade and unbilled receivable balances decreased year on year to a total of US$25.6m from a total of US$30.6m. Work in Process (unbilled receivables) decreased to US$1.0m in 2012 compared to US$10.1m in 2011. Retentions receivable increased to US$0.8 m compared to US$0.5 m in 2011.

Trade payables have increased to US$7.7m as of year-end 2012 compared to US$6.5m in the preceding year.

In non-current liabilities, the accrual related to employees terminal benefits decreased to US$8.3m from US$10.5m. .

The final dividend of US$ 1.0m paid in 2012 related to 2011 profits.

Retained earnings and other reserves totalled US$22.8m as at the end of 2012 compared to US$25.4m as at the end of the 2011.

International Financial Reporting Standards (IFRS)

The Consolidated Financial Statements of Norcon and its branches and subsidiary companies have been audited by PKF Savvides & Co Ltd., the Company's auditor. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) under the historical cost convention.

Arne Dag Aanensen

Chief Financial Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2012

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2012

Selected notes to the accounts

1. Incorporation and principal activities

Country of incorporation

The Company NORCON PLC (the ''Company'') was incorporated in the Isle of Man on 2 June 2008, as a company limited by shares under the Isle of Man companies act 2006. On the 28 July 2008, the company became public and had been admitted for trading at the AIM of the London Stock Exchange. Its registered office is at Fort Anne, Douglas, IM1 5PD, Isle of Man.

Principal activities

The principal activities of the Group, which are unchanged from last year, and are the provision of project management and outsourcing services as well as consulting engineers. The group comprises of the holding company Norcon PLC, registered in the Isle of Man, the subsidiary company Norconsult Telematics Limited, registered in Cyprus (which includes branches/operations in Saudi Arabia, U.A.E. Abu Dhabi, Kuwait, Indonesia and Malaysia) and its subsidiary companies Norconsult Telematics and Company LLC registered in the Sultanate of Oman, Norconsult Telematics AS registered in Norway, the group of Norcon Global Management & Consulting Ltd registered in Cyprus and its subsidiary undertakings Norcon Global Management & Consulting Inc and Norcon Global Management and Consulting LLC registered in the state of Delaware, USA, Norconsult Telematics Integrated Solution Co. Ltd registered in the Republic of Sudan (dormant), Norconsult Telematics Ltd registered in Southern Sudan (dormant), Norconsult Telematics (London) Ltd registered in the United Kingdom and the associate company Norconsult Telematics (Saudi) Ltd registered in the Kingdom of Saudi Arabia.

In 2012 the group has operated in the following countries: Saudi Arabia, Indonesia, Kuwait, UAE Abu Dhabi, Oman, Malaysia, Sweden, United Kingdom, Thailand, Philippines and the United States of America.

2. Accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented in these consolidated financial statements unless otherwise stated.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Adoption of new and revised IFRSs

During the current period the Group adopted all the new and revised IFRSs and International Accounting Standards (IAS), which are relevant to its operations.

At the date of authorization of these financial statements some Standards were in issue but not yet effective. The Board of Directors expects that the adoption of these Standards in future periods will not have a material effect on the consolidated financial statements of the Group.

3. Segmental analysis

The consolidated entity operates in one business segment (telecommunications, IT and defence systems consulting) for primary reporting and four geographical segments for secondary reporting being as follows: United States of America, Europe, Middle East and Asia.

4. Tax

The tax on the Group's results before tax differs from the theoretical amount that would arise using the applicable tax rates as follows:

The corporation tax rate is 10%. The Board of Directors have decided to register the company as a Cyprus tax resident, as it is deemed that the management and control of the company is exercised in Cyprus. In this respect tax computation under Cyprus tax law has been prepared.

Under certain conditions interest income may be subject to defence contribution at the rate of 15% (10% to 30 August 2011). In such cases this interest will be exempt from corporation tax. In certain cases, dividends received from abroad may be subject to defence contribution at the rate of 20% for the tax years 2012 and 2013 and 17% for 2014 and thereafter (in 2011 the rate was 15% up to 30 August 2011 and 17% thereafter).

Income tax on the Saudi Arabia branch has been provided on the estimated taxable profit at 20% (2011: 20%).Income tax on the Kuwait branch has been provided on the estimated taxable profit at 15% (2011: 15%).Income tax on the SE Asia Operations branch has been provided on the estimated taxable profit at 25% plus 20% on the profit after tax ‑ repatriation of profits (2011: 25% plus 20% on the profit after tax ‑ repatriation of profits).Income tax of the Malaysia branch has been provided on the estimated taxable profit at 25% (2011:15%).The subsidiary company in Norway is subject to 28% tax of its income.The subsidiary company in Oman is subject to income tax at the rate of 12% on taxable income in excess of RO30.000.

5. (Loss)/profit per share attributable to equity holders of the parent

Diluted earnings per share

Note: The warrants expired on 28 July 2011 without been exercised.

6. Dividends

In October 2012, the Board of Directors paid dividend of US$1.000.000 out of the 2011 profits. The Board of Directors does not recommend the payment of a dividend for the year 2012.

Dividends are subject to a deduction of special contribution for defence at 20% for the tax years 2012 and 2013 and 17% for 2014 and thereafter (up to 31 August 2011 the rate was 15% and was increased to 17% for the period thereafter to 31 December 2011) for individual shareholders that are resident in Cyprus. Dividends payable to non‑residents of Cyprus are not subject to such a deduction.

7. Trade and other receivables

As at 31 December, the ageing of trade receivables is as follows:

The fair values of trade and other receivables due within one year approximate to their carrying amounts as presented above.

8. Trade and other payables

The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.

9. Contingent liabilities

The bankers of the Saudi Arabia branch have given bank guarantees to the equivalent of US$6.403.499 (2011:US$6.156.450) in the normal course of the Branch's business.

Letters of guarantee (Performance Bonds) for the group's operations in UAE Abu Dhabi amounting to US$2.602.200 (2011:US$2.602.200) were in issue as at 31st December 2012. An amount of US$650.550 (2011:US$650.550) (which represents 25% of the performance bond) is blocked from the branch's bank balances as security for the issue of this performance bond with the remaining balance being secured by the issue of a corporate guarantee from the Branch's ultimate holding company Norcon Plc. Also a letter of guarantee for AED50.000 for the registration of the Norconsult Abu Dhabi branch was in issue as at 31st December 2012 (2011:AED50.000).

A bank guarantee amounting to US$10.094 ‑ RO 3.876 (2011:US$242.181 ‑RO 93.000) was issued by the Group's subsidiary in Oman.

The company has provided a corporate guarantee of US$750.000 to its subsidiary company Norconsult Telematics Limited in favour of Societe Generale Bank‑ Cyprus Limited as a security among others for credit facilities provided by the bank to the subsidiaries.

10. Annual accounts

Annual accounts for the year ended 31 December 2012 will be sent to shareholders shortly and will be available to view from the Company's website, www.norconplc.com